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Group Wage Curves

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Abstract

Using panel data on U.S. MSAs, this paper estimates how a typical MSA's wages of different demographic groups, and prices, are affected by overall MSA unemployment, the distribution of unemployment among different groups, and national prices and wages. MSA unemployment has strong effects on MSA wages and prices, but the distribution of unemployment among different groups has weak effects on wages and prices. Using these estimates, simulations show that targeting high-unemployment groups for unemployment reductions will not reduce wage or price inflation pressures. The estimates also show that the effects of MSA unemployment on prices and disadvantaged groups' wages are greater (in absolute value) at lower unemployment rates. As a result, simulations using these estimates suggest that national unemployment can be reduced with less inflationary pressures by targeting unemployment reductions at MSAs with high unemployment.

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  • Timothy J. Bartik, 2000. "Group Wage Curves," Upjohn Working Papers and Journal Articles 00-63, W.E. Upjohn Institute for Employment Research.
  • Handle: RePEc:upj:weupjo:00-63
    Note: Portions of this paper are incorporated into Appendix 9 of Timothy J. Bartik. 2001. Jobs for the Poor: Can labor Demand Policies Help? New York: Russell Sage Foundation.
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    References listed on IDEAS

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    1. Robert J. Gordon, 1998. "Foundations of the Goldilocks Economy: Supply Shocks and the Time-Varying NAIRU," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 297-346.
    2. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, January.
    3. Ray C. Fair, 1999. "Does the NAIRU Have the Right Dynamics?," American Economic Review, American Economic Association, vol. 89(2), pages 58-62, May.
    4. repec:fth:prinin:343 is not listed on IDEAS
    5. David Card, 1995. "The Wage Curve: A Review," Working Papers 722, Princeton University, Department of Economics, Industrial Relations Section..
    6. Olivier Blanchard & Lawrence F. Katz, 1997. "What We Know and Do Not Know about the Natural Rate of Unemployment," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 51-72, Winter.
    7. David Card, 1995. "The Wage Curve: A Review," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 285-299, June.
    8. Gordon, Robert J, 1988. "The Role of Wages in the Inflation Process," American Economic Review, American Economic Association, vol. 78(2), pages 276-283, May.
    9. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    10. Martin Neil Baily & James Tobin, 1977. "Macroeconomic Effects of Selective Public Employment and Wage Subsidies," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 8(2), pages 511-544.
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    Cited by:

    1. David G. Blanchflower & Andrew J. Oswald, 2005. "The Wage Curve Reloaded," NBER Working Papers 11338, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    wages; MSA; unemployment; demographics; inflation; Bartik;

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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